Forex Marketz Daily Forex News – Fully Markets Update
Speculation swirls: Kuroda-Abe meeting boosts expectations for further monetary easing
TOKYO — Market expectations for additional monetary easing in Japan are growing, spurred by a Friday meeting between Bank of Japan Gov. Haruhiko Kuroda and Prime Minister Shinzo Abe.
News of the meeting sent stocks leaping as expectations for further easing mounted. The Nikkei Stock Average ended the day up 1.76% from Thursday’s close, at a daily high of 17,880. Mitsui Fudosan and Mitsubishi Estate rose 6% and 4%, respectively. Both real estate companies would likely benefit from more easing.
The dollar gained against the yen on foreign exchange markets as investors’ appetite for stock risk grew. The U.S. currency fetched 121 yen by Friday evening, with the yen at its weakest in two weeks.
October will be a busy policymaking month for the BOJ, making investors particularly responsive to signs of a possible change in tack. The bank will release on Oct. 1 its Tankan quarterly business sentiment survey. Two policy board meetings will follow: the first on Oct. 6-7, and the second on Oct. 30. Policy board members’ outlooks for economic growth and prices will be revealed following the second meeting. An unexpected round of additional easing from last October is also on investors’ minds.
“Even if the bank decides to simply take in the state of the economy in October, declining prices mean that additional easing should begin before next spring,” predicts Junichi Makino, chief economist at SMBC Nikko Securities.
But the central bank’s bullish outlook on economic and price growth could leave those waiting on further easing disappointed. “Core prices remain strong,” Kuroda told reporters after his meeting with Abe. The consumer price index excluding fresh food and energy grew 1.1% on the year in August, the central bank chief explained. This marks the sharpest growth since October 2008.
Some market players remain similarly skeptical. “Most citizens don’t want to see prices pushed up by rising costs,” said Izuru Kato, head of Totan Research. “There’s no need for the central bank to hit the 2% inflation target particularly soon,” he noted.
(Nikkei)
Speculation swirls: Kuroda-Abe meeting boosts expectations for further monetary easing
